Illinois schools struggle to soften pension losses

Sunday

May 4, 2014 at 4:00 PM

DAVID MERCER, Associated Press

CHAMPAIGN, Ill. — Concerned about retirements and its ability to recruit new professors, the University of Illinois is working on a plan to make up for what employees will lose after the state's landmark pension overhaul, but most other state universities say they don't have the ability to follow suit.

Most say they just don't have the money to do anything about it.

"Where does this money come from?" asked Matt Bierman, budget director at Western Illinois University, where up to 150 employees are expected to retire, almost 8 percent of the university's 2,000 staff and faculty. "If we're going to add another benefit to our employees, which is probably deserved, we still have to find the revenue or cut expenses."

Illinois lawmakers passed the pension overhaul plan last December to address a $100 billion shortfall in funding state retirement benefits. Signed into law by Gov. Pat Quinn, it cut cost-of-living increases for retirees and capped the amount of earnings that can be applied toward pensions.

The changes take effect in June, but the plan is being challenged in court. That includes a motion filed Friday in Sangamon County by a group that represents university employees and retirees asking that the law be entirely set aside until its constitutionality has been determined.

But many employees of public universities already have decided to retire to avoid losing pension benefits under a new way of calculating them due to the overhaul — or are considering it.

In April, state universities identified an additional problem — an unintended glitch with a date in the law that could further reduce pension payouts for several thousand university employees. Lawmakers last week filed legislation to fix that problem, but there is no guarantee it will happen.

The State University Employees Retirement System says more than 400 employees at the University of Illinois campuses in Urbana-Champaign, Chicago and Springfield have filed paperwork to retire in May and June. And many more are possible.

Details of the U of I plan to cushion employees' losses have yet to be decided, but many administrators assume it will happen. They hope it will keep as many current faculty members around as possible and keep the university on par in recruiting with schools like the Massachusetts Institute of Technology and Stanford University.

But some wonder where the money will come from.

"Is it going to come out of my budget?" asked David Cahill, head of the Department of Materials Science and Engineering. He then ventured a guess that the school's steadiest source of revenue — tuition — might ultimately be at least part of the source.

Cahill will lose money under the pension changes, and he's "absolutely" considering leaving after 23 years.

"It would be very disappointing to have to leave here," the 52-year-old said, adding that his wife recently took a new job in the area, though off campus. "Our kids were raised here."

But Cahill's campus is better situated than most. The U of I's budget is $5.6 billion, compared to just $243 million at Western Illinois in Macomb.

Paul Bauer has already made the decision to retire from Northern Illinois University in DeKalb in a few weeks.

Bauer is director of NIU's School of Music. At 57, he's spent 28 years at NIU and hadn't planned to step aside for a while. But staying will reduce his pension by "tens of thousands of dollars."

NIU President Doug Baker says as much as 20 percent of the school's faculty and staff, about 800 people, could leave. With a budget of $446 million, NIU isn't considering any kind of pension supplement either, spokesman Paul Palian said.

That is where the potential problems on campuses around the state start to come into focus.

About a third of NIU's graduate school staff is leaving, Bauer said. The School of Music will be particularly affected, he said, since about a third of its students are grad students.

"There are little pockets around campus, offices, that are going to be so negatively affected it's going to be difficult to provide the services they would like to apply," he said.

Some schools are looking at the possibility of cutting class offerings. That's the case at Southern Illinois University in Carbondale, said Rae Goldsmith, the school's chief communications officer.

Just what might not be offered won't be known until all the retirees are gone in the next few months. The school anticipates about 200 of its 5,000 employees will leave, about 20 percent more than usual.

With a $613 million budget, SIU also will be unable to afford any kind of pension supplement, Goldsmith said.

Western Illinois' Bierman says tough recruiting for some disciplines will become even more difficult.

"We struggle now trying to find accounting professors," he said. "So for us to add another wrench into it ... it's going to be another factor against us."